Delhi paid second-highest income tax but denied legitimate share in Central taxes: Arvind Kejriwal to Union FM Nirmala Sitharaman

A year after coming to power at the civic level, Kejriwal also sought to underline the ‘lack’ of adequate financial assistance to the Municipal Corporation of Delhi (MCD) compared to others across the country.

Kejriwal asked the Union finance minister to consider Delhi as a “unique case” in this regard and include it in the Terms of Reference of the 16th Finance Commission which would be constituted shortly with its recommendations to cover five years starting April 2026.

“Since the Finance Commission plays a crucial role in the fiscal federalism of India, I want to draw your attention towards the discrimination that the people of Delhi are facing from the last 23 years. This step-motherly and unfair treatment by the Central Government towards the Delhiites has been flagged innumerable times… but no action has been taken,” Kejriwal wrote.

Delhi, the chief minister continued, enjoyed a unique or ‘sui generis’ status among all states and Union Territories in India; while it fell in the broad category of a Union Territory with a Legislature, it had been working similarly to other states in financial matters and had a separate Consolidated Fund with effect from December 1, 1993.

The pattern of funding of Delhi’s Budget, Kejriwal further stated, was more or less at par with other states with the financial transactions of its government including servicing of small savings loans being met out of its own resources like in other states.

“Delhi is also devolving funds to local bodies, out of its net proceeds. But despite this, the Government of NCT of Delhi neither gets legitimate grants in lieu of share of Central taxes nor any share to supplement the resources of its Local Bodies as is the case with other states,” Kejriwal stated.

“The share of Delhi has been frozen at an astonishingly low amount from the last 23 years. It becomes even more evident while comparing with other neighboring states with similar populations,” the chief minister complained.

Sharing figures related to the disbursal from the Central Pool to other states, Kejriwal cited the examples of Haryana and Punjab in this regard. In FY 2022-23, he said, the former had received Rs 10,378 crore and the latter Rs 17,163 crore as their share while Delhi got only Rs 350 crore.

“Had Delhi been treated in an unbiased manner, its share would have been Rs 7,378 Cr. Unfortunately, Delhi’s share from the Central Pool of taxes has been stagnant at Rs 350 cr since 2001-02, when the budget of Delhi was Rs 8.93 cr,” he said, adding that Delhi received the same share even when its budget had increased eight times in comparison to over Rs 73,000 crore in FY 2023-24.

The chief minister also sought to underline financial assistance to Urban Local Bodies (ULBs) which were constituted on the basis of the 73rd and 74th constitutional amendments and emphasised that the MCD was an aberration in this respect.

The 14th and 15th Central Finance Commission put into place grant-in-aid for local bodies with the former allocating Rs 2,87,436 crore for local bodies for the period 2015-2020 and the 15th Central Finance Commission recommending Rs 4,36,361 crore for the years 2021-26.

“This amounts to Rs. 500 per capita per year to the ULBs. But Delhi’s ULB, the MCD, has been facing extreme unjust behavior over the last few years, with it receiving nothing from the Central Government,” Kejriwal complained.

Kejriwal argued that based on the recommendations of Central Finance Commissions, the capital’s cash-starved MCD should have received an additional Rs 7,000 crore since 2015. The lack of financial assistance for the civic body, the CM said, precipitated “huge budget deficits” leading to late payments to vendors, delayed salaries to its employees, and, in turn, prevented it from being “able to deliver at its full potential.”

“It is high time that justice be done and Delhi gets its reasonable share similar to what other states get. Delhiites shall always be grateful for your help!” he concluded.